JPMorgan analyst Rajat Gupta upgraded Tesla from Underweight to Neutral on Friday, setting a price target of $475 on the stock — a 228% increase from the $145 target he inherited just weeks ago.
The new target implies an upside of 13.5% from Thursday’s close of $418.45.
Gupta, who assumed coverage on Tesla in early May from longtime JPMorgan auto analyst Ryan Brinkman, initially maintained the former analyst’s bearish stance and $145 price target — which at the time implied a downside of 66.1%.
The reversal marks a dramatic shift for a franchise that had been one of the most prominent Tesla bears on Wall Street for the better part of a decade.
From 60% Downside to 13.5% Upside
Brinkman’s $145 target, last reiterated in early April after Tesla‘s first-quarter delivery miss, warned of roughly 60% downside and advised investors to “approach Tesla shares with a high degree of caution.”
Brinkman had pointed to a persistent gap between the company’s valuation and its automotive fundamentals, rising competition, and brand controversy linked to CEO Elon Musk’s political activity.
Gupta’s $475 target flips that framing entirely, anchoring the valuation in Tesla‘s non-automotive businesses — robotaxis, humanoid robots, and autonomous driving software — rather than in traditional vehicle metrics.
Based on Thursday’s close of $418.45, the new price target implies a potential upside of 13.5%.
The previous $145 target, by contrast, implied a downside of 65.3% from the same level — a swing of nearly 80 percentage points in the implied return.
Tesla shares have staged a sharp recovery since early April, when the stock touched a low of approximately $337 following a first-quarter delivery miss and an inventory buildup of more than 50,000 vehicles.
Better-than-expected first-quarter earnings on April 22 — adjusted EPS of $0.41 versus consensus of $0.36, with automotive gross margins expanding to 21.1% from 16.2% a year earlier — helped reverse sentiment.
The stock initially spiked to $406.77 in after-hours trading on the EPS beat, then reversed sharply through the earnings call as Musk outlined softer timelines on the Cybercab and Optimus and CFO Vaibhav Taneja raised the 2026 capital expenditure ceiling to more than $25 billion from a prior $20 billion forecast.
Shares rallied through early May despite the spending concerns, touching a high of $453.40 before pulling back amid broader profit-taking.
Tesla then traded in a range between roughly $420 and $445 through the second half of May, before slipping to $418.45 by Thursday’s close.
The stock remains below its 52-week high of $498.83, set in December 2025.
Physical AI and Vertical Integration
Gupta framed the upgrade around Tesla‘s position in what he called “physical AI,” arguing the company is entering new addressable markets where its ability to execute will be key to both adoption and market size — a dynamic the analyst compared to the Jevons paradox.
“The unique advantage TSLA has, and unmatched at an industrial level scale, is the degree of vertical integration (and increasing further over time) across all the hardware + software products it builds, combined with the efficacy and speed of technology development,” Gupta wrote.
He added that Tesla’s integration advantage, “while largely known at a high-level, is still somewhat under-appreciated and misunderstood, for the sheer starting-point advantage it brings.”
Tesla‘s vertical push has accelerated this year.
The company taped out its next-generation AI5 inference chip in April, with AI6 tapeout targeted for December, and is building an in-house fabrication facility called Terafab in Austin to handle higher volumes.
The company more than doubled its planned capital expenditure to over $25 billion this year to fund six new factories spanning lithium refining, LFP batteries, Cybercab, Semi, a new Megafactory, and Optimus production.
OptimusRobot
A central pillar of the research note is Tesla‘s Optimus humanoid robot program.
“Using cell and vehicle production factories as a test bed for Optimus/Humanoids should not only lower COGS for the base automotive business,” Gupta wrote, adding that it will, “more importantly, help validate the product at an industrial scale (and also drive down its cost) for enterprise and commercial adoption,”
The analyst projected a US total addressable market of approximately 5 million humanoid robots and a global TAM of roughly 30 million units by 2040.
Gupta described the dynamic as “a classic flywheel effect, somewhat analogous to AWS and Kiva at AMZN,” referring to Amazon’s internal robotics program that was originally developed for its own warehouses before broader commercial application.
According to the analyst, Optimus could deliver a potential 5% reduction in automotive COGS through manufacturing efficiency gains.
Tesla is converting the former Model S and Model X line at Fremont into a humanoid robot production site, with low-volume production targeted for the summer of 2026 and high-volume output planned for 2027 at an eventual capacity of one million units annually.
A second-generation line at Gigafactory Texas is designed to reach 10 million units per year.
Musk said in January at the World Economic Forum that Optimus would be available for public purchase by the end of 2027.
Goldman Sachs analyst Mark Delaney has estimated the humanoid robot market could reach $38 billion by 2035, projecting Optimus could add between $0.10 and $13.00 per share to Tesla’s earnings between 2030 and 2035 depending on production volumes.
Robotaxi and FSD Network Effects
On autonomous driving, Gupta highlighted Tesla‘s data advantage — roughly 10 billion miles of recorded driving data and a personal fleet of approximately 9 million vehicles on the road today.
Rolling out autonomous vehicles to more regions and cities, the analyst argued, should capture more edge cases and improve the efficacy of Tesla’s camera-only vision system, generating “significant network-effects across both robotaxi adoption/pricing, but also personal FSD adoption.”
Gupta projected Tesla‘s personal fleet could reach approximately 35 million vehicles by 2040, alongside roughly 40 million Tesla robotaxis.
Increased manufacturing efficiency and R&D returns from Optimus could then allow for “significant pricing competitiveness in the base automotive business, providing optionality to re-accelerate EV adoption and supercharger utilization, with feedback loops into FSD and robotaxi adoption,” the analyst wrote.
Active FSD subscriptions reached approximately 1.28 million in the first quarter of 2026, up 51% year over year.
Tesla‘s FSD fleet crossed 10 billion cumulative miles in early May, matching the data threshold Musk had set in January as the volume needed for unsupervised deployment.
The company launched unsupervised robotaxi rides in Dallas and Houston in April, expanding beyond Austin, where the service first launched in June 2025.
The combined fleet across all three Texas cities stood at approximately 25 unsupervised vehicles by the end of April, with five cities remaining on the company’s first-half 2026 expansion plan.
Morgan Stanley called the expansion ‘a material evolution’ and projected Tesla would operate 1,000 vehicles by year-end. An early fare comparison in Dallas showed Tesla pricing 56% below Waymo on the same route.
In Europe, the Dutch vehicle authority RDW issued formal type approval for FSD (Supervised) on April 10, making the Netherlands the first European country to approve the system.
Tesla began pushing the software to customers within 24 hours, with Dutch owners logging over 10 million kilometres in less than a month.
The EU’s Technical Committee on Motor Vehicles reviewed the Dutch approval on May 5 as part of the process toward broader European clearance.
Revenue and Earnings Outlook
JPMorgan now projects Tesla‘s revenue will more than double from approximately $95 billion in 2025 to roughly $203 billion by 2030, with nearly half of the incremental growth coming from services and newer businesses tied to autonomy and robotics.
Earnings per share are expected to “potentially inflect” beyond 2028, jumping nearly threefold to approximately $7.50 by 2030 from roughly $1.95 in 2026.
Tesla reported adjusted first-quarter 2026 EPS of $0.41 and revenue of $22.39 billion, up 15.8% year over year.
Services and other revenue jumped 42% to $3.75 billion, the fastest-growing segment, while total automotive revenue rose 16% to $16.23 billion.
The company’s full-year 2025 revenue had declined 3% to $94.8 billion — its first annual drop since going public.
A Long History of Bearishness
JPMorgan’s shift comes after years of bearish calls on the stock.
Under Brinkman, the firm maintained an Underweight rating through Tesla’s 1,700% rally since a 2018 Sell recommendation that cited rising competition from German luxury automakers.
CEO Musk responded to a post resurfacing the original call in April, commenting “lol.”
Brinkman had lowered his price target to $120 from $135 in March 2025 before raising it back to $145, and warned of 60% downside as recently as April 6 — less than two months before the upgrade.
In that note, he described a “persistent gap” between Tesla‘s share price and its fundamentals, arguing the stock had risen “alongside a material collapse in consensus for all performance metrics.”
